Regulators express growing concern over predatory loans, which the authors take to mean loans that borrowers should decline. Using a model of consumer credit in which such lending is possible, they identify the circumstances in which it arises both with and without competition. The authors find...

Regulators express growing concern over predatory loans, which we take to mean loans that borrowers should decline. Using a model of consumer credit in which such lending is possible, we identify the circumstances in which it arises both with and without competition. We find that predatory...

Regulators express growing concern over predatory loans, which we take to mean loans that borrowers should decline. Using a model of consumer credit in which such lending is possible, we identify the circumstances in which it arises both with and without competition. We find that predatory...

Regulators express growing concern over “predatory lending,” which we take to mean lending that reduces the expected utility of borrowers. We present a rational model of consumer credit in which such lending is possible, and identify the circumstances in which it arises with and without...

We analyze the effectiveness of hedge funds' high-water mark provisions (HWMs) at mitigating moral hazard and adverse selection, when the supply of capital is competitive. We show that the HWM does not allow better managers to distinguish themselves ex ante. Regarding moral hazard, we find that...

The political choice between candidates with different redistribution policies plays out very differently in a complete financial market. When voters have the opportunity to trade election-contingent securities, we find that 1) wealth considerations have no effect on voting, so the interaction...

Complete financial markets transform the political choice between candidates with different redistribution policies. If redistribution policies do not affect aggregate wealth, then financial trade implies that wealth considerations have no effect on voting and so do not affect who wins. However,...